Review of “Online Video: The New Merchandising”

I was surfing around tonight when I discovered an Akamai whitepaper released this September called “Online Video: The New Merchandising.” (there’s a link to download the whitepaper at the end of this post).

Being my typical jaded self, I pretty much expected this was going to be a super-slanted vendor whitepaper that completely twisted reality to suit the vendor’s own selfish aims. But, I was somewhat surprised. While the whitepaper certainly did live out that expectation in some regards, it contained a lot of useful material – useful enough that I wanted to call some of it out here for this community.

First, the positives – I’ll save the negatives for later.

I firmly believe that at this moment in online video’s evolution in the retail space, every single additional online video case study that makes its way out into the open makes the collective shout in the marketplace a little bit louder, “Video Works!!” A lot of us reading this blog already know this. Many of us here may not yet be convinced. Without further ado, here are the quotes from the whitepaper with my comments following in red italics.

“ Conversion rates increased 45% on ten different products after we tested more than 100,000 video impressions. Load times turn out to be a big deal for online video. If you delay the page load by a few seconds, it can reduce the conversion rate significantly.”

“10% to 15% of shoppers who look at videos go on to click and buy. Without the videos, we get about a 1.5% conversion rate. The videos may be costly and a lot of work, but have helped increase sales over 200%.”

— Fireplace Supplies eRetailer

(This is a decent quote, but it’s missing context – where were the videos on the site? What was the placement on the page? It does support the argument that video on a retail site, perhaps when used effectively, can increase conversion rate by tipping the sale.)

“ Tests showed that a banner ad received only a 0.3% click-through rate while the video version received a 5% click-through rate.”

— Footwear eRetailer

(I want to know more. The clickthrough rate actually doesn’t surprise me, but the increase in performance was way off the DoubleClick study. Was the banner on the site? On an affiliate site? On a highly trafficked web publisher site? If so, was the video served on a static page? What was the content? Placement of video is a major key to success- strategic placement can significantly boost response – but if you screw it up or don’t follow best practices, it can actually hurt your results.)

(I want to know more. I know of retailers that have actually seen a decrease in AOV. This space needs a little more exploration. For a future blog post)

• 400X increase in total sales conversions”

(Or NOT! I’m going to take issue with that 400X increase in conversions quote. I’m a big believer in video for online retail, but there’s no way on EARTH video increased conversions by 400X. I’ll chalk this one up to the whitepaper author accidentially writing “400X” instead of “400%.” Even 400% is an incredible performance lift – not outside the range of the possible, but probably an exception case rather than the norm. My advice to anyone reading this blog that’s building ROI projections for video commerce would be to consider a 400% lift a pie-in-the-sky number. Somewhere along the lines of 15% – 75% is probably more “normal” – different types of products will benefit at different rates from merchandising videos.)

Overall, the quotes were good ones – and the ongoing validation of video’s performance in an online retail setting is critical to growing acceptance of the medium among retailers.

Where the whitepaper fell down a bit, I think, was in the “Deployment considerations” section – quoted in its entirety below, with my comments inserted in red.

Deployment Considerations

The primary considerations when deploying video can be divided into two areas: Pre-deployment and Deployment. Pre-deployment encompasses the basic strategic, creative and technological decisions that go into producing video, including scripting, production and video format choices. Deployment concerns are focused largely on delivery and end user site performance. The ultimate goal, of course, is to deliver the highest quality video possible while minimizing file sizes and streamlining delivery to ensure fast, consistent download performance without buffering lag times.

I am not going to argue with Akamai for one second that online retailers should not strive to deliver the highest quality video while minimizing file sizes and streamlining delivery. I’m also not going to argue that providing fast, consistent download performance isn’t key, and that failing to deliver on this can have direct ROI implications and negatively impact the customer experience. What bothers me about this statement isn’t so much what it says as what it doesn’t say.

Placement of video within the site, on site pages, and content placed within the video player itself are every bit as important to consider as download speed and smooth content delivery. These elements are also just as much a part of a technical video deployment as content delivery. In fact, the placement of videos on or off your site are a huge driver of video commerce success or failure. Think about it: Is the video on the brand page? Product page? An affiliate site? An external blog? Within your search results? Served up over an ad network? Where on the product page – as a primary or secondary element? Does the video auto-play or is it customer-initiated? Does the video drive toward a sale without distracting the customer and what technical means used to achieve that experience? What can the customer actually do with the video? How large is the video player? Is it enough to simply convert the customer with the video asset, or should there be options to turn the video asset into an acquisition tool for new customers as well? These considerations all impact customer experience and the performance of a video commerce program.

Second point: Really fast, high quality, expensive to produce videos do not necessarily equate to ROI. If this is your basic assumption about video for online retail, or if this belief is a major reason you are not producing video now, I’m going to challenge that assumption. The mindset is an absolute buzzkill for online video in an e-commerce environment. I might even go so far as to say that this core belief – held by so many retailers – is precisely what is holding online video back in the e-commerce world, despite all the promise. The real paradigm shift that is driving video commerce now is that everyone is a producer – and yes, that includes retailers. Just look at the hockey stick growth curve of YouTube. One doesn’t need to go far either to find stats on the exploding consumer demand for online video. It doesn’t mean that by bypassing super-expensive video production in your initial program phases that your retail videos are doomed to look like they were produced by an epileptic with a paranoid aversion to SteadyCam. In fact, it is surprisingly inexpensive to produce relatively high quality videos. Many retailers that start out with video do it this way:

– With existing staff

– A couple of hours a week for the first couple of months

– Using high-end consumer video recording equipment a staff member brought into the office from home

– Using existing empty space for no rent (empty office, warehouse)

– Procuring only basic lighting and set design materials.

– Really. I’m not kidding!

For all the professional video producers out there reading this: I’m not suggesting that a retailer should never use outsourced production or hire more video production staff in-house. There are clear advantages of outsourcing video or building up a more robust in-house capability (the subject of a later post, I’m sure).

Many retailers that already know the power of video to sell are invested heavily in in-house production teams or highly capable outsourced agencies or production shops, professional sets, actors, scriptwriters, lighting & sound equipment, and super high-end cameras. Now why would a retailer ever invest in such things?

Because when video is applied strategically… it works!

The challenges are clear: once the strategic and creative aspects of video creation have been managed, ensuring adequate delivery speed and video quality becomes the primary driver of ROI for video deployment.

(I strongly dispute this, see above)

More than one-quarter of regular online video users said they would have a more negative overall perception of a site with poorly performing video content. Other users cited a slow web site makes them question the integrity of the overall site and hesitant to enter sensitive credit card data online. For online retailers who are using video to extend and grow their core brands, these numbers carry a special relevance. Alienation of any portion of their valuable online customer base will result in an immediate lost revenue opportunity, along with diminished brand loyalty and affinity.

(The other thing I was going to write about is the whitepaper’s failure to mention that video is no longer just a merchandising tool for online retailers. In fact, many retailers now use video as a marketing and customer acquisition tool. I’m tired though and this post is already too long, so I’ll save that topic for a future entry :-).

If you made it this far in the blog post, congrats! Or, if you just cheated and skipped to the end to download the whitepaper, here it is! :-)

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Justin Foster

Justin is Co-Founder and VP Market Development of RealTime Email at Liveclicker. Prior to Liveclicker, Justin led the services practice for WhatCounts, Inc., an email marketing services provider, where he was responsible for client strategy and deliverability. He also founded the Email Marketing Roundtable, an industry discussion forum that represents over 1,500 email marketers worldwide including the majority of the largest online retailers in North America.